FED SURVEY

March 17, 2015

These survey results represent the opinions of 38 of the nations top money managers, investment
strategists, and professional economists.
They responded to CNBCs invitation to participate in our online survey. Their responses were collected
on March 12-13, 2015. Participants were not required to answer every question.
Results are also shown for identical questions in earlier surveys.
This is not intended to be a scientific poll and its results should not be extrapolated beyond those who
did accept our invitation.

1. For U.S. economic growth and corporate earnings, the

strength of the dollar is:
90%

76%

80%

70%

60%

50%

40%

30%

20%

13%

11%

10%

0%
Positive

CNBC Fed Survey March 17, 2015

Page 1 of 30

Negative

Don't know/unsure

FED SURVEY
March 17, 2015
2. What effect does strength of the dollar have on your GDP
growth/core inflation forecast for 2015?

1.00

0.80

0.60

0.40

Pct. points

0.20

0.00

-0.20

-0.22

-0.22

GDP

Inflation

-0.40

-0.60

-0.80

-1.00

CNBC Fed Survey March 17, 2015

Page 2 of 30

FED SURVEY
March 17, 2015

3. As a result of the strength of the U.S. dollar, Fed policy will be:
70%

61%
60%

50%

40%

32%
30%

20%

10%

5%
3%
0%
Easier than
originally
forecast

The same as
originally
forecast

CNBC Fed Survey March 17, 2015

Page 3 of 30

Tighter than
originally
forecast

Could go either
way

Don't
know/unsure

FED SURVEY
March 17, 2015
4. The Fed will remove the phrase patient from its monetary
policy statement in ...

0%
January

February

10%

Jan 27

Mar 17

30%

40%

20%

33%

11%

July

0%
3%

August

0%
3%

September

3%
0%

October

3%
0%

Won't remove
Don't
know/unsure

27%

14%

June

2016 or later

21%

0%
0%
0%
0%
0%

CNBC Fed Survey March 17, 2015

Page 4 of 30

70%

0%

April

December

60%

0%

March

November

50%

69%

80%

FED SURVEY
March 17, 2015
5. Relative to an economy operating at full capacity, what best
describes your view of the amount of resource slack in the U.S.
right now for labor?
Considerably more slack now

Modestly more slack now

No difference

Modestly less slack now

Considerably less slack now

80%

69%

70%

63%
60%
60%

55%
50%

48%

50%

Modestly more slack

40%
40%

36%

34%
Considerably more slack

30%

Modestly less slack

24%
20%
20%

11%
8%

10%

4%

4%

July 29

9%

9%
6%

16%

16%
13%

3%

August 20

Sep 16

9%

8%

11%

5%

6%

CNBC Fed Survey March 17, 2015

Page 5 of 30

19%

Considerably less slack

No difference

0%

18%

5%
0%
Oct 28

6%
0%
Dec 16

Jan 27

3%

Mar 17

FED SURVEY
March 17, 2015
Relative to an economy operating at full capacity, what best
describes your view of the amount of resource slack in the U.S.
right now for production capacity?
Considerably more slack now

Modestly more slack now

No difference

Modestly less slack now

Considerably less slack now

70%
64%

64%

60%
60%

56%

59%
Modestly more slack

57%

55%

50%

40%

30%

Modestly less slack

24%
No difference

Considerably more slack

20%

19%
13%

10%
8%

13%
9%

14%
11%

5%
Considerably less slack

0%
July 29

August 20

Sep 16

CNBC Fed Survey March 17, 2015

Page 6 of 30

Oct 28

Dec 16

Jan 27

Mar 17

FED SURVEY
March 17, 2015
6. Where do you expect the S&P 500 stock index will be on ?
June 30, 2015

December 31, 2015

June 30, 2016

December 31, 2016

2,400

2311

2296

2,300

2250

2248

2187

2,200

2149

2194

2111
2075

2,100

2,000

2017

2029

2199
2128

2122

2109

2093
2066

2053

2247

2058

1,900

1,800
Apr 28

Jun 4

July 29

Sep 16

Oct 28

Survey Dates

CNBC Fed Survey March 17, 2015

Page 7 of 30

Dec 16

Jan 27

Mar 17

FED SURVEY
March 17, 2015
7. What do you expect the yield on the 10-year Treasury note will
be on ?
June 30, 2015

December 31, 2015

June 30, 2016

December 31, 2016

4.0%

3.52%
3.5%

3.43%

3.54%

3.45%
3.30%
3.19%

3.14%

3.24%
3.15%

3.04%

3.16%

2.96%

3.0%

2.89%
2.80%

2.90%

2.63%

2.5%

2.54%

2.57%

2.28%
2.14%

2.0%
Apr 28

Jun 4

Jul 29

Sep 16

Oct 28

Survey Dates

CNBC Fed Survey March 17, 2015

Page 8 of 30

Dec 16

Jan 27

Mar 17

FED SURVEY
March 17, 2015
8. What is your forecast for the year-over-year percentage
change in real U.S. GDP for ?
2015

2016

3.5%

3.3%

3.1%
+3.02%

+3.02%

+3.00%

+2.99%

+2.90%

+2.90%

+2.90%

2.9%
+2.81%

+2.88%
+2.84%

+2.75%

+2.80%

2.7%
+2.69%

2.5%

Jan 28,
'14

Mar 18

Apr 28

Jun 4

Jul 29

Sep 16

Oct 28

Dec 16

Jan 27,
'15

Mar 17

2015 +2.90% +3.02% +3.00% +2.81% +2.75% +2.90% +2.90% +3.02% +2.99% +2.69%
2016

CNBC Fed Survey March 17, 2015

Page 9 of 30

+2.88% +2.80% +2.84%

FED SURVEY
March 17, 2015
9. What is your forecast for the year-over-year percentage
change in the headline U.S. CPI for ?
2015

2016

2.4%

2.2%

2.0%

2.17%

2.29% 2.27%

2.02%

2.07%

2.08%

2.01%

1.8%

1.74%
1.6%

1.4%

1.2%

1.17%
1.0%

1.01%
0.8%
Jun 4

Jul 29

Sep 16

Oct 28
Survey Dates

CNBC Fed Survey March 17, 2015

Page 10 of 30

Dec 16

Jan 27, '15

Mar 17

FED SURVEY
March 17, 2015
10.
When do you expect the Fed to first increase the fed
funds rate and when will it allow its balance sheet to decline?

Survey Date

Fed Funds Hike

Average Forecast

Balance Sheet
Average Forecast

April 28, 2014 survey

July 2015

October 2015

June 4 survey

August 2015

March 2016

July 29 survey

August 2015

December 2015

August 20 survey

July 2015

Not asked

September 16 survey

June 2015

December 2015

October 28 survey

July 2015

January 2016

December 16 survey

July 2015

February 2016

Jan. 27, 2015 survey

September 2015

April 2016

March 17 survey

August 2015

April 2016

CNBC Fed Survey March 17, 2015

Page 11 of 30

FED SURVEY
March 17, 2015
12.
How would you characterize the Fed's current monetary
policy?
Too accommodative

Just right

Too restrictive

Don't know/unsure

60%
Too accomodative

49%

50%
43%

49%

49%

50%

50%

47%

46%
43%

40%

49%

54%

43%

44%
39%
Just right

32%

30%
28%

20%

10%

17%

Don't know/unsure

13%

8%
6%

6%

5%

3%
0%

Jul 31,
'12

Page 12 of 30

6%

3%

3%

3%

Jul 29,
'14

Aug 20

Sep 16

CNBC Fed Survey March 17, 2015

6%
3%

5%

3%restrictive
Too

Oct 28

Dec 16

Jan 27,
'15

Mar 17

FED SURVEY
March 17, 2015
13.
Where do you expect the fed funds target rate will be on
?
2.5%

2.13%

Dec 2016
2.04%

1.99%

2.0%

1.93%
1.84%
1.75%

1.53%

1.56%
1.48%

1.5%

1.38%
June 2016

1.26% 1.27%

1.05%

1.0%

0.97%

0.99%

0.98%

0.92%

0.89%

0.89%

0.83%

0.82%

0.73% 0.71%

0.83%
0.70% 0.72%

0.68%

Dec 2015
0.50%

0.5%

0.39% 0.40%
0.33% 0.31%
0.25% 0.25%

June 2015

0.0%
Jul
30

Sep
17

Oct
29

Dec
17

Jan
28
'14

Jun 30, 2015

Mar
18

Apr
28

Jun 4

Jul
29

Aug
20

Sep
16

Oct
28

Dec
16

Jan
27,
'15

Mar
17

0.50% 0.39% 0.40% 0.33% 0.31% 0.25% 0.25%

Dec 31, 2015 0.97% 0.92% 0.82% 0.70% 0.72% 0.83% 0.99% 0.68% 1.05% 0.89% 0.98% 0.89% 0.83% 0.73% 0.71%
Jun 30, 2016

1.53% 1.56% 1.48% 1.38% 1.26% 1.27%

Dec 31, 2016

1.99% 2.13% 2.04% 1.93% 1.75% 1.84%

CNBC Fed Survey March 17, 2015

Page 13 of 30

FED SURVEY
March 17, 2015
14.
At what fed funds level will the Federal Reserve stop
hiking rates in the current cycle? That is, what will be the
terminal rate?
Aug 20

3.16%

Sep 16

3.20%

CNBC Fed Survey March 17, 2015

Page 14 of 30

Oct 28

3.30%

Dec 16

Jan 27, '15

3.17%

3.11%

Mar 17

3.04%

FED SURVEY
March 17, 2015
15.
When do you believe fed funds will reach its terminal
rate?
Aug 20

Sep 16

Oct 28

40%

Average:
35%

Aug 20 survey:

Q4 2017

30%

Sep 16 survey

Q3 2017

25%

Oct 28 survey

Q4 2017

20%

Dec 16 survey

Q1 2018

15%

Jan 27 survey

Q1 2018

10%

Mar 17 survey

Q4 2017

5%

0%

CNBC Fed Survey March 17, 2015

Page 15 of 30

Dec 16

Jan 27 '15

Mar 17

FED SURVEY
March 17, 2015
16.
How will lower oil prices affect U.S. GDP/core inflation in
2015?
Jan 27
0.40

0.30

Mar 17

0.36

0.27

0.20

Pct. points

0.10

0.00

-0.10

-0.20

-0.23
-0.28

-0.30

-0.40
GDP

CNBC Fed Survey March 17, 2015

Page 16 of 30

Inflation

FED SURVEY
March 17, 2015
17.
What is your forecast for WTI crude oil's lowest price in
the current downturn?
Jan 27

Mar 17

$50

$45

$40

$39.95

$39.58

$35

$30

$25

$20

CNBC Fed Survey March 17, 2015

Page 17 of 30

Average Forecast

FED SURVEY
March 17, 2015
18.
What is your forecast for the lowest level of the dollar vs.
the euro in the current downturn??
Mar 17
$1.10

$1.05

$1.00

$0.95
$0.95

$0.90

$0.85

$0.80
Average Forecast

CNBC Fed Survey March 17, 2015

Page 18 of 30

FED SURVEY
March 17, 2015
19.

The ECB will hit its 2% inflation target within:

Jan 27

Mar 17

40%

Averages:

34%

35%

31%

Jan 27 survey: 3.11 years

Mar 17 survey: 3.29 years

30%

25%

25%

22%

22%
20%

16%
14%
13%

15%

13%

10%

6%
5%

3% 3%

0%
One year

Two years

Three years

CNBC Fed Survey March 17, 2015

Page 19 of 30

Four years

Five or more
Don't
years
know/unsure

FED SURVEY
March 17, 2015
20.
Relative to the ECB's goal for QE of bringing inflation
back towards its 2% target, the size of the program is:
40%

36%
35%

33%

30%

25%

19%

20%

15%

11%
10%

5%

0%
Big enough

Just right

CNBC Fed Survey March 17, 2015

Page 20 of 30

Not big enough

Unsure/don't know

FED SURVEY
March 17, 2015
21.
How much concern do you have that economic weakness
in Europe could create wider global risks?
(1=Not concerned at all, 10=Highest level of concern)

Sep 16

Oct 28

Dec 16

Jan 27 '15

Mar 17

10

5.4

5.4

CNBC Fed Survey March 17, 2015

Page 21 of 30

4.8

5.0

4.7

FED SURVEY
March 17, 2015
22.
What is the percentage chance each of the following
countries will leave the euro zone in the next 3 years? (0%=No
chance of leaving, 100%=Certainty of leaving):

45%

41%
40%

35%

30%

25%

20%

15%

13%

12%

10%

9%

8%

5%

3%

0%

Greece

Portugal

CNBC Fed Survey March 17, 2015

Page 22 of 30

Spain

Italy

Ireland

Germany

FED SURVEY
March 17, 2015
23.
Has the U.S. stock market already discounted a fed funds
rate hike by the Federal Reserve next year?
Dec 16

Jan 27

Mar 17

60%

56%
53% 53%
50%

47%

40%

36%

38%

30%

20%

8%

10%

0%

0%
Yes

CNBC Fed Survey March 17, 2015

Page 23 of 30

9%

No

Don't know/unsure

FED SURVEY
March 17, 2015
24.
What is the single biggest threat facing the U.S. economic
recovery?
Apr 30

Jun 18

Jul 30

Sep 17

Apr 28

Jul 29

Sep 16

0%

Oct 28

5%

Oct 29

Dec 17

Dec 16

10%

15%

Jan 27 '15

20%

Jan 28 '14
Mar 17

25%

Mar 18

30%

35%

40%

45%

European recession/financial crisis

Tax/regulatory policies
Slow job growth
Inflation
Deflation
Debt ceiling
Rise in interest rates
Geopolitical risks

Global economic weakness

Slow wage growth
Other

Don't know/unsure
Don't
know/uns
ure

Global
Rise in
Slow wage
Geopolitic
economic
interest
growth
al risks
weakness
rates

Other

Apr 30

0%

11%

Jun 18

0%

13%

Jul 30

4%

14%

10%

Sep 17

2%

7%

Oct 29

0%

Dec 17

2%

Jan 28 '14

Mar 18

Debt
ceiling

Deflation Inflation

Slow job
growth

European
Tax/regula
recession/
tory
financial
policies
crisis
31%
20%

2%

2%

0%

20%

0%

3%

3%

20%

28%

15%

2%

2%

0%

22%

30%

8%

18%

4%

0%

2%

22%

27%

4%

13%

8%

3%

3%

3%

24%

29%

8%

2%

15%

2%

0%

2%

29%

32%

5%

0%

21%

12%

0%

0%

2%

30%

21%

7%

0%

18%

5%

0%

5%

3%

26%

23%

10%

Apr 28

0%

13%

18%

8%

0%

5%

3%

21%

26%

3%

Jul 29

3%

12%

12%

12%

0%

3%

6%

12%

29%

12%

Sep 16

3%

11%

11%

6%

0%

3%

6%

29%

26%

6%

Oct 28

3%

8%

8%

10%

0%

3%

3%

15%

18%

31%

Dec 16

0%

3%

14%

3%

0%

6%

3%

14%

14%

40%

Jan 27 '15

0%

16%

6%

41%

16%

6%

0%

0%

0%

9%

13%

0%

Mar 17

0%

14%

17%

28%

8%

6%

0%

6%

3%

0%

14%

6%

CNBC Fed Survey March 17, 2015

Page 24 of 30

FED SURVEY
March 17, 2015
25.
In the next 12 months, what percent probability do
you place
on the
U.S. entering recession? (0%=No
FED
SURVEY
chance of
recession,
100%=Certainty of recession)
April
30,
40%
36.1%

35%
34.0%

30%

28.5%

25.9%

25%

26.0%

25.5%

20%

20.3%

20.6%

20.4%

18.4%

18.2%

17.3%

19.1%
17.6%

15%

16.9%

15.1%

16.9%
16.2%
15.3%

15.2%

16.4%

16.2%

15.0%

14.6%

13.6%
13.0%

10%

5%

0%

Aug
Jan
Sep Oct
Mar Apr
11,
23,
19 31
16 24
'11
'12

Jul
31

Jan
Sep Dec
Mar Apr Jun
29,
12 11
19 30 18
'13

Jul
30

Sep Oct Dec

6
29 17

Jan
Mar Apr
28
18 28
'14

Jul
29

Sep Oct Dec

16 28 16

Jan
Mar
27
17
'15

Series1 34.0 36.1 25.5 20.3 19.1 20.6 25.9 26.0 28.5 20.4 17.6 18.2 15.2 16.2 16.9 18.4 17.3 15.3 16.9 14.6 16.2 15.0 15.1 13.6 13.0 16.4

Survey Dates

CNBC Fed Survey March 17, 2015

Page 25 of 30

FED SURVEY
March 17, 2015
26.

What is your primary area of interest?

Currencies
0%

FED SURVEY
April
Fixed Income
9%

30,

Other
9%

Equities
26%

Economics
57%

Comments:
Robert Brusca, Fact and Opinion Economics: U.S. policy is not
looking ahead. The Fed is looking over its shoulder afraid it has done
too much. It is too worried that the economy will 'suddenly
accelerate' when there is no evidence of it and no reason to expect
it. The Fed has moved into a period of policy irrationality. It is
completely out of touch with what its inflation target means and
what missing it means.
Thomas Costerg, Standard Chartered Bank: We do not think the
removal of "patient" means automatically a hike three months later
in June; after all, pre-commitment is precisely what the Fed wants to
avoid. The data will be key. We see the first rate hike in September
as we think the Fed may want to see core PCE inflation finding a
floor, which is unlikely before the summer. We think the fed funds
rate will level off at 2.0% by Q1-2017. The US business cycle is
maturing and we think 2016-17 GDP growth could gradually lose
CNBC Fed Survey March 17, 2015
Page 26 of 30

FED SURVEY
March 17, 2015
steam, especially if the Fed tightens policy.

FED Haverford
SURVEY Trust Co.: It is becoming clear that
John Donaldson,
Aprilto
30,
the FOMC is ready
answer the question: Does the economy still
warrant zero interest rates? with a resounding "NO".
Neil Dutta, Renaissance Macro Research: All else equal, the
dollar is negative for U.S. growth. In the real world, however, all else
is never equal. The rise in the dollar is broadly offset by lower longterm interest rates and oil prices. Thus, as a forecaster, we're forced
to stick with the underlying momentum in the economy. While GDP
tracking estimates ebb and flow for reasons unrelated to domestic
demand, the employment figures tell us that trend is around 3%.
Dan Greenhaus, BTIG: The issue facing the Fed in coming months
is the same as the one facing private investors; handicapping the
response to a rate hike in asset markets and, more importantly,
money markets, is an incredibly difficult proposition.
Stuart Hoffman, PNC Financial Services Group: Bears on the
economy will get boiled in cheap oil. Weak retail sales in Jan and
Feb are deja vu all over again as will be a strong rebound in sales in
March and April as weather returns to normal. Don't sell short the
American consumer!
Art Hogan, Wunderlich Securities: The Market has priced in the
negative effects of a strong $ and none of the positives that will
come next and be a powerful tailwind
John Kattar, Ardent Asset Advisors: Low inflation, a strong
dollar, and spotty economic data give the Fed some wiggle room if
they want to delay tightening. But I think their desire to normalize
and create some dry powder for the next downturn trumps all. They
will move in June.

CNBC Fed Survey March 17, 2015

Page 27 of 30

FED SURVEY
March 17, 2015
David Kotok, Cumberland Advisors: Europe's negative interest
rates are an awesome and powerful force. Market agents
underestimateFED
how SURVEY
much they encourage rising asset prices. They
30,
make us very April
bullish.
Subodh Kumar, Subodh Kumar & Associates: Raw geopolitics
like the Middle East, Russia/Ukraine or even in Asia and economic
politics like Greece, Argentina and Venezuela appear
underestimated. Adding in Fed changes and dollar gains means the
capital markets, like Icarus in Greek mythology, may be flying too
high on risk complacency. Restructuring and management quality
should focus in holdings.
Guy LeBas, Janney Montgomery Scott: 1) Oil price declines could
present a timing issue--energy businesses are cutting capex quickly,
but consumers are accumulating savings slowly--that's negative in
the short term, but positive over 4 or more quarters. 2) The single
biggest force in the financial world right now is the cash being placed
in European investors' hands by the ECB. Money managers aren't
being paid to sit on cash, and a portion of those funds will continue
to dribble into the U.S. bond markets. 3) Fed policymakers don't
seem to have a good agreement on how a stronger dollar is likely to
impact growth and inflation. Our thinking is that the stronger dollar
leads to imported deflation and a modest growth headwind, but a
passage in January's FOMC minutes suggested some Fed officials
believe otherwise.
John Lonski, Moody's: If the dollar is too strong then U.S. interest
rates are too high vis-a-vis the rest of the world. As long as the 10year German bund yields less than 0.5%, the 10-year US Treasury
yield is unlikely to spend much time, if any, above 2.25%.
Joel Naroff, Naroff Economic Advisors: The markets are already
assuming a Fed rate hike so dropping the patience term is a nobrainer. Those who haven't figured out that rates are going up and
CNBC Fed Survey March 17, 2015
Page 28 of 30

FED SURVEY
March 17, 2015
are waiting to actually see it happen should not be factored into any
Fed decision.

FED SURVEY

April
30, Capital Management: Biggest near-term
James Paulsen,
Wells
risk for the Fed is a surprising bounce in foreign economic growth
causing the U.S. dollar to peak and oil & other commodity prices to
jump. If this happens as wages begin accelerating and as the U.S.
unemployment rate nears 5%, Wall Street will increasingly fear the
Fed is far behind the curve.
Lynn Reaser, Point Loma Nazarene University: While the Fed
may seek a smooth and slow exit from monetary ease, stock and
bond markets, at least initially, will bolt for the door.
John Roberts, Hilliard Lyons: We see the major risk of the Fed's
eventual interest rate increases is their impact on forward earnings
growth as companies can no longer constantly re-finance debt at
ever lower interest rates which has significantly added to corporate
profit growth over the past five-plus years. This will eventually
result in corporate profit growth declining and not meeting investor
expectations.
John Ryding, RDQ Economics: The majority on the FOMC appear
increasingly aware that the economy is approaching full employment
with the monetary pedal to the metal. I, like Jim Bullard, fear the
Fed has already waited too long and expect hiking to begin in June.
Allen Sinai, Decision Economics: The transition by the Federal
Reserve to a focus on raising inflation, raising interest rates, and
jettisoning forward guidance is hugely important for all financial
markets.
Hank Smith, Haverford Investments: Forget about ECB policy.
European economic growth will be sub-average at best until member
countries address fiscal structural reforms. What are the odds of that
CNBC Fed Survey March 17, 2015
Page 29 of 30

FED SURVEY
March 17, 2015
happening any time soon?

FED
SURVEY
Diane Swonk,
Mesirow
Financial: Low inflation may be secular as
30, reflecting changes in technology; this
well as cyclicalApril
in nature,
complicates the game plan for the Fed, and how they manage the
reach for yield.
Mark Vitner, Wells Fargo: The soaring dollar and plunging oil
prices create a lot of noise for policymakers. We may be going back
to a time of rolling recessions in certain parts of the economy (the oil
patch, the rust belt, etc.) which cannot be effectively resolved with
monetary policy.
Scott Wren, Wells Fargo Advisors: Janet Yellen and Company are
going to be in no hurry to hike rates. The question as to whether a
hike will occur in June or September is splitting hairs. The much
more important question is what will be the speed and magnitude of
the hikes. In my opinion, it will take the Fed years to normalize
rates. This cyclical bull market still has room to run.

CNBC Fed Survey March 17, 2015

Page 30 of 30